Bhutan Faces Financial Sanctions and Embargoes Over Lack of Compliance
Bhutan has been found lacking in its implementation of technical requirements related to financial sanctions and embargoes. The country’s ratings have been downgraded across several key areas, raising concerns about its ability to effectively regulate and supervise financial institutions.
Non-Compliance with Financial Sanctions and Embargoes
According to a recent report, Bhutan is considered:
- Partially Compliant (PC) in implementing measures against money laundering and terrorist financing.
- Non-Compliant (NC) in implementing targeted financial sanctions related to terrorism and terrorist financing, as well as those related to proliferation.
- Non-Compliant (NC) in implementing measures against the misuse of correspondent banking relationships and money or value transfer services.
Concerns about Regulatory Framework
The report highlights concerns about Bhutan’s ability to effectively regulate and supervise financial institutions, including banks and other financial entities. This has raised questions about the safety and stability of the country’s financial system.
- Lack of Transparency: Bhutan’s beneficial ownership regime lacks transparency, making it difficult to track the true owners of companies and financial assets.
- Insufficient Guidance: Financial institutions in Bhutan have not received adequate guidance or feedback on compliance with international standards.
Economic Impacts
As a result of these findings, international partners have imposed financial sanctions on Bhutan, restricting the country’s access to foreign capital and limiting its ability to engage in international trade. This has had significant economic impacts on the country, with many businesses struggling to stay afloat.
Path Forward
To lift the sanctions, Bhutan will need to take immediate action to address these compliance issues. This may involve:
- Implementing new laws and regulations.
- Improving its financial intelligence units.
- Increasing transparency in its beneficial ownership regime.
By addressing these compliance issues, Bhutan can work towards regaining international trust and re-establishing its reputation as a responsible financial actor.